Kentucky Cigarette Tax Revenue Increases 37% in FY 2010

The Office of the State Budget Director reports that while overall state tax receipts were down 2.4% in the fiscal year that ended on July 30, 2010, receipts from the state cigarette tax were up 37% in FY 2010 over FY 2009—an increase of more than $75 million.  Tax collections in most other areas were down in FY 2010:

Summary of Kentucky General Fund Receipts: FY10 and FY09

                                       Actual        Actual           Difference      Difference

                                         FY10         FY09               (mil. $)              (%)

Sales and Use                     2,794.1       2,857.7                 -63.6              -2.2

Individual Income                3,154.5       3,315.4               -160.9              -4.9

Corp. Income                          237.9          268.0                 -30.1            -11.2

LLET                                       145.9          121.7                  24.3             20.0

Coal Severance                      271.9          292.6                 -20.6              -7.1

Cigarette Taxes                      278.4          203.0                  75.4             37.1

Property                                  516.2          513.1                    3.0               0.6

Lottery                                    200.0          193.5                    6.5               3.4

Other                                      626.2          661.4                 -35.2              -5.3

The Office of the State Budget Director attributes the significant growth in cigarette tax revenue to the 30 cent increase in the cigarette tax enacted in 2009 (that was supported by Kentucky Voices for Health). Read the full report from the Office of State Budget Director here.

Kentucky Voices for Health had advocated for a 70 cent increase in the tax because research has shown that such increases reduce smoking and save lives.

Where We Stand

• Significantly increase the cost of tobacco products to reduce smoking, especially among youth and pregnant women
• Allocate a significant portion of the revenue to increase health coverage and to improve the health of Kentuckians, including statewide comprehensive tobacco prevention and cessation programs

Our Tobacco Tax Policy Brief

The Price of Smoking: Case for Increasing Kentucky’s Cigarette Tax, February 2008

Raising Kentucky’s cigarette tax closer to the national average will reduce youth smoking by over 17%, reduce future smoking related deaths by over 27,800, save over $1.3 billion in long-term smoking related costs, and increase state revenue by over $240 million per year.

What's New?

New Stop Smoking Ads: The national quit smoking program EX will debut the second phase of advertising and promotions designed to help smokers “re-learn” life without cigarettes. The campaign will begin airing in November on radio, television, online and in print. EX is sponsored by the National Alliance for Tobacco Cessation, a collaborative of state and national public health groups. For more information and to read the full text of the ads click here.

American Lung Association Report: The American Lung Association recently released a report that highlighted Kentucky’s failure to fund a comprehensive tobacco cessation benefit for Medicaid recipients. Kentucky is one of only six states that do not provide such coverage. For more information click here.

Medicaid Coverage of Tobacco Cessation:  A new Centers for Disease Control report details Medicaid coverage of tobacco cessation treatment in the fifty states.  Nationally, one-third of Medicaid recipients smoke, and Medicaid expenditures attributable to smoking total nearly 22 billion dollars annually, representing 11% of all Medicaid expenditures.  Read the full report here.

Did you Know?

2 out of 3 likely Kentucky voters 2008 support raising the tobacco tax by $1 a pack: A December 2008 survey also found that voters were more likely to favor a candidate who supported a tobacco tax increase. See survey findings here and a complete press package with background on the poll and a complete list of survey questions and answers.

Kentucky ranks first in the nation in the percent of adults who smoke: Kentucky (28.6%), West Virginia (25.7%), Oklahoma (25.1%), and Mississippi (25.1%) had the highest prevalence of current smokers. Smoking prevalence was lowest in Utah (9.8%), California (14.9%), and Idaho (16.8%). Source: Centers for Disease Control. State-Specific Prevalence of Cigarette Smoking Among Adults and Quitting Among Persons Aged 18–35 Years—United States, 2006.

At 30 cents per pack, Kentucky’s cigarette tax is lower than five of its seven bordering states and ranks 47th in the nation—only South Carolina, Mississippi and Missouri are lower. Source: Campaign for Tobacco Free Kids. Map of State Cigarette Tax Rates.

Know More

• We're number 41! Ten years after the November 1998 state tobacco settlement, Kentucky ranks 41^st in the nation in funding programs to protect kids from tobacco, according to a national report by a coalition of public health organizations.
• Win-Win-Win: The Campaign for Tobacco free kids sets out the reasons for a higher cigarette tax in a Special Report with links to more info:

• Kentucky Poll: In a 2007 poll, 60 percent of Kentucky voters favored a 75 cent increase in the cigarette tax. See a PowerPoint here. And check the most recent poll numbers above: support has gone up!
• Cigarette Tax Benefits:An estimated 54,900 kids alive today won’t become smokers if we raise the cigarette tax 70 cents. The number rises to 78,500 with a $1 increase. Other benefits: lives saved and huge health cost savings down the road. See the full set of estimated benefits for a 70 cent and $1.00 increase from the Campaign for Tobacco-Free Kids.

Help to Quit

Kentucky’s Tobacco Quit Line is a FREE telephone service that helps Kentuckians quit smoking and using tobacco. Click below for more info:

"Go To" Groups

Kentucky Voices for Health members go to these groups for information on the health effects of smoking:

• American Cancer Society
• American Heart Association
• American Lung Association of Kentucky
• Campaign for Tobacco Free Kids

Want American Heart Association Action Alerts? Click here.